The restart began after Lion Copolymer Holdings L.L.C. stopped production at the ESBR factory in Baton Rouge in December 2013. The facility was one of the original plants opened during World War II in the national effort to create a synthetic rubber industry to counter the loss of Southeast Asian natural rubber plantations to Japanese forces.
Over the years the factory was owned by a laundry list of companies—ranging from Sears, Roebuck and Co., Gates Rubber and Armstrong Rubber to Armtek, DSM and Lion Copolymer and its eventual owner, Goradia Capital L.L.C. Lion pointed to poor market conditions in some of the plant's customer segments and a reluctance to reinvest in the operation as reasons for the shutdown.
Nelson, with several employees and some investors, bought the facility and began putting it back in action as East West Copolymer.
“We spent a bit of that time (2014) and a little bit of 2015 proving ourselves, working to get all our customers back,” Nelson said. The facility restarted with two masterbatch and two clear lines by the end of the first quarter of 2014.
“We were able for the most part to get back what we had before the shutdown,” Nelson said. “For 2016 we have contracts with pretty much all the customers we had before we shut down. We have a contract level a little above what we had in 2015, which is great. We're positioned for success in 2016.”
The firm brought customers in to see how the plant had been improved and automated, “is in good shape and running, the product quality good, in some cases better than it was before.”
Restoring its customer base was a big vote of confidence for the business, Nelson said.
“These are our traditional customers, who we worked with the last 20, 30 years, so they know us. The key thing for them was are we going to be around, be a credible organization. We demonstrated that.”
One of East West Copolymers' goals is to be the low-cost producer of ESBR. The facility traditionally had a production volume of about 80 million pounds, but it today is “right-sized” and not geared for that level, Nelson said.
“As we increase volume, as we are doing this year, we are getting closer to that goal (of being the low-cost producer), because we were able to take out a lot of cost at the plant and run it more efficiently,” he said. The factory has plenty of room to add capacity if needed.
East West Copolymer also secured supply agreements, among them with Exxon, which operates a huge complex next door to the rubber company. The revived SR producer had plans to buy utilities from its petrochemical neighbors to decrease costs, and while it hasn't been able to do that yet, Nelson said the idea still is on the drawing board.